MODEL ESTATE PERFORMANCE 2026

Sophie Davidson

Sophie is a Senior Analyst in the Research team at Carter Jonas, reporting on market trends and themes across both the rural and commercial divisions.

The Model Estate report has been featured for more years than I can remember, lastly in 2025 Summer Terrier. It provides useful short and long-term trends and comparisons for asset classes typically managed by local authority surveyors. 

About the Model Estate 

The ‘Model Estate’ is a hypothetical agricultural estate created by Carter Jonas in 2010. The Estate has evolved over the years and comprises over 3,000 acres. It includes a combination of let and in-hand farms, a commercial and residential portfolio, a telecoms mast, fishing rights, a syndicate shoot, a solar farm, a 100MW Battery Energy Storage System, and a quarry. It is located within the geographical triangle bounded by the M4, M40 and M5 motorways.

In using the example of a hypothetical mixed rural estate, similar in structure to many under the management of Carter Jonas, we gain an interesting and helpful insight into the performance of a rural estate and the dynamics at play. This enables us to make strategic recommendations for the future.

Please note that all findings in this report are based on valuations undertaken on 31 December 2025.

Overview

The Model Estate was valued at £53.55m in December 2025, representing a modest 0.7% decline from a valuation of £53.91m in 2024. This marks a deviation from the capital growth trend seen over the past five years, largely reflecting pricing corrections across many asset classes within the Estate.

The valuation has been undertaken during a period of structural change, most notably following reforms to Inheritance Tax (IHT). The Autumn Budget in October 2024 set out significant changes to Agricultural Property Relief (APR) and Business Property Relief (BPR), with a partial rollback announced in December 2025. Many rural estates are now exposed to IHT for the first time, bringing greater focus on proactive succession planning and a clear understanding of asset values and relief eligibility.

However, rural estates remain comparatively attractive relative to many other investments, supported by their income‑generating capacity and long‑term capital growth prospects. Over the past decade, the Model Estate has delivered a robust annualised growth rate of 3.3%, equating to cumulative growth of 38.3%. This underlines the robustness of diversified estates, which have continued to demonstrate strong long‑term performance despite short‑term adjustments in specific asset classes.

Component performance

Model Estate Chart

As in previous years, there was considerable variation in capital growth across the different assets. The Estate’s renewable energy portfolio was the standout performer by year-on-year increase, with levels of growth that far exceed the other assets. However, although it increased its share of the total valuation from 3.6% to 5.4%, this remains a relatively small contributor.

The let farm portfolio made a positive contribution to the overall valuation and, at 32.0% of the Estate’s total value, remains a key determinant. By contrast, the in-hand farmland, which accounts for 24.3% of the valuation, recorded a decline over the year, partially offsetting these gains.

The let residential portfolio, commercial assets, Manor House and quarry all ended the year in negative territory. Meanwhile, the ‘other’ assets maintained their value.

Renewable energy: 46.9%

The Estate’s renewable energy assets, comprising a solar farm and a Battery Energy Storage System, were the Estate’s top-performing asset for the fourth consecutive year. The solar asset benefits from stable, contracted income streams, while the battery system is now operational and performing as expected.

The integrated operation of energy generation and storage provide a clear competitive advantage, supporting flexibility, resilience and secure income. This aligns with a growing investor appetite for income strip investments, where demand for assets backed by contracted income is strengthening values.

Despite an increase in its share of the Estate’s total value from 3.6% to 5.3%, it remains a relatively small component in value terms. This reflects a disproportionately high value contribution relative to its 1.0% share of total acreage.

Let farms: 2.3%

The Estate’s let farmland continued its upward trend, increasing by 2.3% from the previous year. Representing 58.1% of the Estate’s total land area, this makes a positive contribution to the overall valuation. 

The let farmland market has remained highly competitive, characterised by a lack of supply relative to demand. The volume of land coming to the market has been limited, reflecting, in part, a growing landlord preference to retain control and flexibility.

Defra data shows that land rented for a year or more, as a proportion of owned agricultural land, fell from 47.0% to 46.8% (‑17,458 acres) in the 12 months to June 2025, marking the smallest area recorded since the start of the dataset in 2002. This is a result of a combination of factors, including the increasing allocation of land towards diversification opportunities that offer the prospect of higher returns, alongside changes to APR and BPR (detailed above). These changes have reinforced a preference for structures that increase the proportion of trading assets relative to investment assets, in line with the Balfour principle, as a means of mitigating tax liabilities.

The increase in value of the Estate’s let farmland contrasts with the softening seen in average farmland values more broadly. Demand for well‑let land has remained supported by limited supply and the prospect of holdings moving closer to reversion. As a result, pricing is increasingly driven by vacant possession potential, rather than income return alone. 

Other: 0.0% 

The value of the sporting rights, telecoms mast and fishing rights held firm over the last year. These assets continue to generate a steady income, with an overall yield of 13.0%.

Residential: -1.4%

There was a -1.4% change in the value of the Estate’s let residential assets over the year, reversing the robust upward trend seen over the past five years. Even though tenant demand remains firm, the investment case for rural residential assets has weakened.

Our recent research on the impact of the government’s intention to raise Minimum Energy Efficiency Standards (MEES) found that 93.3% of privately rented housing on rural estates are currently below an EPC C, and so are at risk of being non-compliant. This compares to 56.5% of all privately let residential properties in England (Ministry of Housing, Communities and Local Government). The likely requirement for significant capital investment has reduced investor appetite, particularly for older, less energy efficient stock.

The Renters’ Rights Act 2025 introduces major reforms from May 2026, including the removal of no‑fault evictions and fixed‑term tenancies, alongside rent control measures. While these provisions strengthen tenant protections, they reduce management flexibility and have further weakened investor sentiment. In addition, a 2% income tax surcharge on rental income is due to be introduced from April 2027.

There is already evidence of estate owners choosing to sell non-core assets or converting them to less regulated uses, such as holiday lets. Our recent private landlord survey revealed that 22% of the portfolio landlords who responded have already sold some properties, citing reasons such as tax and legislative changes.

That said, if the supply of rental properties is further reduced, landlords who invest in upgrades could benefit from a supply and demand imbalance, with a smaller supply of homes likely to command higher rents, subject to any rent controls which appear under consideration. 

In-hand farmland: -2.3% 

In line with broader trends in the farmland market, the value of the Estate’s in‑hand farmland portfolio recorded a -2.3% change over the year, following six consecutive years of capital growth. By both value and land area, the in-hand farmland is the second largest portfolio after let farms, and is a key determinant of the overall valuation.

Our farmland index indicates that average land values peaked in Q1 2025, before easing gradually in the subsequent months, as economic and political pressures took hold. Both commodity price volatility and eroding profit margins remained key considerations. In particular, elevated borrowing costs, rising labour expenses, and the delayed launch of the Sustainable Farming Incentive have placed pressure on cash flows and led buyers to adopt a more selective approach. Certain segments of the market have continued to command premium prices, but overall, sentiment has become more cautious. This has been particularly noticeable where rollover buyers (benefiting from Business Asset Rollover Relief) are present, where local demand is strong, or where environmental purchasers are active.

Commercial: -4.4%

Following three years of marginal losses, the decline in the value of the Estate’s commercial assets accelerated in 2025. Formerly agricultural buildings, the Estate’s commercial portfolio comprises fully let office and industrial assets.

The reflects a broader correction in the commercial market, where demand is now heavily concentrated on prime, well‑located assets. The RICS UK Commercial Property Monitor reports that both occupier and investment sentiment were negative throughout 2025, albeit with slight improvement towards the end of the year. The report highlights that ‘secondary properties remain under pressure’.

Conditions in the office market are highly polarised. Demand and pricing resilience are focused on amenity‑rich, energy efficient buildings with connectivity to urban centres, a trend reinforced by the forthcoming tightening of MEES regulations, with a minimum EPC rating of B set to come into force in 2031 (for commercial buildings over 1,000 sq m). In contrast, secondary offices (like those on the Estate) experienced softer pricing, reflecting weaker occupier demand in the market and exposure to MEES‑related obsolescence risk.

Similar themes are evident across the rural industrial market, where pricing is increasingly linked to condition, specification and anticipated capital investment.

Despite this, demand persists for competitively priced local workspace offering lifestyle benefits, including lower running costs, parking provision, and attractive rural settings. Limited new supply provides some long-term support, although value resilience will depend on proactive asset improvement and repositioning.

Manor House: -6.6%

The Estate’s manor house recorded a change of -6.6% in 2026, following a period of stable valuations over the previous four years.

Several factors are shaping the market, including persistently high borrowing costs, increased sensitivity to running and maintenance expenses, and a growing focus on energy efficiency and sustainability. Buyer demand has become more selective, with the strongest interest now directed towards well‑located, energy‑efficient properties requiring limited immediate capital expenditure. While underlying demand for high‑quality rural living remains, these considerations have continued to weigh on sentiment.

Perhaps the most significant looming change to the market is the High-Value Council Tax Surcharge, targeting properties valued at over £2m. While the change isn’t due to come into force until April 2028, the Valuation Office Agency will begin assessments in 2026. Potential buyers are already factoring these recurring annual costs (estimated to be between £2,500 and £7,500 p.a.), into their long-term calculations.

Quarry: -9.9%

Operational activity remained subdued through 2025, with quarry sales declining further due to continued weakness in housebuilding and infrastructure demand. Index linked rent reviews helped offset this, with a 3.75% increase applied to rent and royalty payments.

Encouragingly, the first phase of restoration progressed, including the start of inert waste tipping, which generated around £135,000 in additional royalty income. This also enabled the return of initial restored land to the Estate, now in aftercare and currently used for grazing. However, the operator has issued notice to occupy additional unworked land, and a planning application for a lateral extension is expected shortly.

Despite weaker mineral sales and ongoing reserve depletion, the quarry’s value has remained relatively resilient, supported by lease driven income growth and long-term demand. Capital value declined by 9.9% over the past year, alongside significant mineral extraction.

Alternative asset classes

Performance across alternative investment asset classes was mixed in 2025. On a capital growth basis, the Model Estate ranked fourth, slipping from third place held over the previous two years. The basket of tangible assets includes gold, equities, commercial property, residential property, classic cars and fine wine. 

Gold prices recorded exceptionally strong growth of 64.6% in 2025. This strength builds on an already robust longer‑term trend. Gold is considered a safe haven asset due to its scarcity, global acceptance and independence from financial institutions, qualities that support demand during periods of economic uncertainty, inflationary pressure or geopolitical stress.

Equities, measured using the FTSE All-Share index, rose by 19.8% in 2025, supported by improved expectations around monetary policy and resilient corporate earnings in several key sectors. However, performance was highly polarised. Gains were heavily concentrated in the commodity, defence and aerospace, and banking sectors, masking weaker outcomes in areas such as real estate, construction and media.

The Morgan Stanley Capital International (MSCI) All Property index (reflecting mostly commercial property values) recorded capital growth of 1.0% in 2025. At an aggregate level, this points to a stabilisation in capital values following a sharp correction between Q3 2022 and Q4 2023. However, performance remained varied across sectors, with retail and industrial assets showing growth, while offices, residential, hotels and other sectors declined.

MSCI Residential, which tracks the investment performance of institutionally owned residential property, recorded a capital value decline of approximately 1.4%. While rental performance remained relatively resilient, this drop reflects the impact of higher interest rates, regulatory changes, and market polarisation.

Fine wine declined by 2.5%, indicating a more selective and consolidating market, while classic cars fell by 3.7% as price growth continued to cool following post pandemic gains.

Conclusions

The Model Estate stands out for its relative stability and consistency. Despite a small decline of -0.7% in 2025, it delivers positive annualised capital growth across every longer time horizon shownODEL. The pattern supports the view that a rural estate’s diversified mix of assets and income streams can help smooth performance when individual components or sectors are under pressure, resulting in lower volatility.